Rate reprieve on insurance

The new rates for the National Flood Insurance Plan announced this week are a "good-news/could-have-been-much-worse-news" scenario for many at the Jersey Shore. Sadly, those rates may still prove unaffordable for large numbers of homeowners, who may have to bid their homes and communities farewell.

The federal government set the maximum flood insurance rate at an estimated $10,723 for a house in the high-risk AE flood zone, but many homeowners could pay as little as $553 a year - the current average is $3,600 - if they elevate to the proper height.

That's a big "if."

How many homeowners will be able to afford to rebuild their homes to reach the proper elevation? And if they manage to elevate their homes, how many will be able to afford even the lower flood insurance rates once federal subsidies for those rates have been phased out? Those are hard truths that need to be faced.

While those who will be losing their subsidies may have to scramble to afford flood insurance after the subsidies go away, they should take some solace in the fact that they had been receiving them for such a long time.

It also will be heartening to some that the top rate charged is far less than what was originally projected. The old high-end estimate of a $31,500 annual premium for a home below the base flood elevation level in the highest-risk flood zone has disappeared, replaced by the more-reasonable $10,723 for a house 4 feet below flood elevation.

The 2012 Biggert-Waters Flood Insurance Reform Act, which removes the subsidies that have historically been given to policyholders, was long overdue.

Historically, the flood insurance program has charged premiums at approximately 40 to 45 percent of their full cost, with taxpayers subsidizing the remainder. There is no reason why those who live far from flood zones should routinely underwrite the risks of those who choose to live in areas vulnerable to flooding. Those subsidies have masked the real risks to property and encouraged development in unsafe areas.

Undoubtedly, some faced with high premiums and/or high reconstruction costs despite government grants may be forced to cut their losses. The result of this could be a shift in the demographics of the Jersey Shore if it turns out that only the well-heeled will be able to afford the cost of living here. But the reality is that there are risks to living along the coast, and those risks come with real, and now unsubsidized, costs.

Nature will continue to alter the coastline; economics likely will continue to shape its demographic mix. As unfortunate as that might be, it will be the "new normal" for life at the Jersey Shore.

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Rate reprieve on insurance

The new rates for the National Flood Insurance Plan announced this week are a 'good-news/could-have-been-much-worse-news' scenario for many at the Jersey Shore.

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